Dozier Internet Law: Legal Opinions and Outside General Counsel

Five times. In the past months Dozier Internet Law has seen five instances in which lawyers, rendering advice and guidance, have gotten themselves and their clients in hot water. One lawyer was indicted with his client. One lawyer was sued as a conspirator with his client. Three others gave advice to clients that ended up getting their clients either indicted or raided by the Feds. What's going on here?

Lawyers have been giving advice for a long time. Are they just getting it wrong? Clearly yes. But no one is perfect, and really good lawyers are sometimes wrong. That's why we have malpractice insurance. But is the law of the web, not really recognized as a specialty, creating more problems due to its complexity?

I think the problem relates to the scope of this area of law. Intellectual property attorneys were the first to carve out expertise in "Internet law". But it is hard to imagine a typical IP attorney giving quality guidance and advice to a client about electronic mail, the legality of online drug stores, or liability for defamation in UGC situations. If corporate/business lawyers get involved, it's hard to understand how they can give high quality guidance about online copyright and trademark law. Part of the challenge continues to be the evolving nature of the law of the web, the application of the reasoning of factually different court decisions, the contradictory and confusing court decisions being handed down, the difficulty understanding online business and technologies, and the apparent willingness of some lawyers to "shoot from the hip".

Let's consider the landscape today. A client wants to know if a website is "legal", and if not what can be changed to make it so. The prudent lawyer will make complete copies of the site, conduct diligence by interviewing the client, place in the file the supporting legal authority, and provide an opinion in writing. The well documented file now contains a record of the opinion and analysis, and coupled with the written opinion letter provides a strong record. Oral opinions are very risky because the lawyer has often included assumptions that are all too often overlooked or forgotten by the client. Clients who simply want a lawyer to validate their business conduct will search out a lawyer who is inexpensive and not necessarily knowledgeable. Their hope and expectation is that doing what a lawyer tells you is legal cannot cause problems. Of course, nothing could be further from the truth. You may have a claim against your lawyer, but the prosecutor, or the FTC, or the Department of Justice, or State Attorney General, or business competitor don't care what your lawyer told you.

Does this mean that a client should never be able to call up his lawyer and get over-the-phone guidance? Of course not. Knowing when a question calls for a simple answer, though, requires strong expertise, knowledge and judgment, and really strong communication skills on both sides. A written opinion is expensive and time consuming, and sometimes unnecessary and often impractical for the day to day guidance clients desire and deserve. But given the "grayness" of many online legal issues, even an oral opinion can have so many exceptions that it of necessity requires a formalized written communication from the lawyer confirming the guidance.

So, what are "opinion letters"? They are the legal conclusions of an attorney given a set of facts and the application of the law to those facts. Factual scenarios vary, of course, and small changes in the facts can make a big difference in the opinion. The law varies...from jurisidiction to jurisdiction. The great opinion letters set out the factual assumptions, identify the laws that may apply, explain the decisions and the extension of those decisions to the facts at hand, and provide possibilities and probabilities to the client. They are designed so that a client can understand the risks associated with certain conduct and make well informed business decisions. The smart client will weigh the risks with the expectations of reward. The risks include the possibility of having to answer for alleged misconduct coupled with the size of that risk. At Dozier Internet Law we are comfortable with offering our opinion in fairly concrete terms, often explaining the possibility of the risk arising as a percentage from each potential claimant, and then explaining the range of financial exposure, the parties who could be exposed, and the average settlements if standards have evolved. There are "rules of thumb" that are applied to claims, although most lawyers are not aware of the rules.

So, it's not as simple as many think. The kinds of questions clients need answered are the questions that will provide them with the maximum amount of information so an informed, and smart, BUSINESS  DECISION can be made...What are the chances the specific party that is on the receiving end of the conduct will litigate? What is their history? Can I be sued personally? Is this criminal? Do people go to prison for this? How much will it cost to settle a claim if one is asserted? Can this conduct adversely affect my business in another way like being "sandboxed" by Google? What is the worst case scenario? Those are some of the questions a good online businessman will ask. From that information, good decisions can be made by the client. Obviously, most online businesses are willing to assume greater risk if the reward is signficant. But, that is a BUSINESS DECISION, and the lawyer offers but one side of the equation.

Dozier Internet Law is often asked to work behind lawyers or offer our second opinion on an issue. So, I see a lot of opinion letters. Clients should stay away from lawyers who load up every opinion letter with so many disclaimers that the letter carries no risk to the lawyer. That is unfortunately a common practice, but there is nothing more reliable than a qualified lawyer giving an unequivocal opinion. And clients should also avoid the lawyer who seems to opine that everything you want to do is illegal. That is the easiest opinion for a lawyer to write since there is very little liability to the firm.

So, am I saying you should avoid lawyers who "rubber stamp" approval of your conduct? Or the attorney who regularly tells you that everything you want to do is illegal? Or the law firm that includes so many disclaimers in its opinion letters that they are inherently unreliable? Well, yes.

And the solution is not earth shattering at all. Get an expert in online law, establish an "outside general counsel" relationship, build a level of trust, and work jointly to nurture the relationship. These are the types of clients lawyers want. And then reach a level of comfort with each other and get on with focusing your energies on growing your business in an informed way. Your Internet lawyer can be one of the most valuable members of your team. Ask yourself if your lawyer is someone you would want to serve on your Board of Directors, or work with as a key executive. If so, that tells you that you feel your lawyer could do a good job of balancing online business considerations with professional guidance. And then...never let him do that! After all, business decisions are for business people. What you need is great legal advice giving due deference to the realities of doing business online.